Gulf Coast Shipping is interested in developing a new type of market for transportation services. They wish to develop a high-speed vessel to compete with slow-moving freight ships that offer low cost transportation and with rapid delivery cargo planes that offer high cost transportation. Managers at Gulf Coast believe a middle market exists that would enable the company to gain business from slower freight ships as well as from more expensive cargo planes. The proposed high speed vessel would be faster than freight ships but slower than cargo planes.

The company has been experimenting with a number of hull forms and propulsion systems that would make the venture economically feasible. For example, multihull and single hull designs have been considered. Additionally engineers must determine whether the vessel should be constructed of steel, aluminum, or some kind of composite material. Possible propulsion systems include water jet and propeller.

B. What are some examples of operational decisions that managers must make? Explain.

C. How do strategic decisions differ from operational decisions?

Solution Preview

A. The major strategic issue facing the managers at Gulf Coast Co. is how to gain market share in the cargo industry, specifically by filling the gap between the expensive cargo planes and slow freight ships. The two primary strategic decisions constantly facing management is cost cutting and growing sales. Since the two are in stark contrast to one another, strategically, ...